What is a Sales Funnel - Use, Application, Examples & More

What is a sales funnel? Is it the same thing as a sales pipeline?

Why all the plumbing terminology?

We get it – you aren't alone. Many sales professionals struggle with the concept and only have surface-level knowledge of what a sales funnel is.

In fact, 68% of companies have not identified or attempted to measure a sales funnel.

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So what is a sales funnel and how does it work?

It's a visualization of your customer's journey from prospect to customer. But what is it in-depth?

Nothing to fret over – we've got the goods. We'll go over:

A general definition 5 steps you can take to create one And some tangible examples to really help you understand the concept.

You'll be an expert in no time.

Sales Funnel 101

What is a sales funnel?

A sales funnel is a visual representation of the customer journey. It's a set of steps for a regular ol' person to become what every business wants – a paying customer.

First contact to deal close.

And, just like a funnel, it's widest at the top and gets progressively smaller. What do we mean by that? Let's create a quick example of a sales funnel at a brick-and-mortar donut shop:

See how the funnel gets smaller the further along in the customer journey we get?

A sales funnel helps your team visualize where leads are in the sales process – and where they drop off. Our example above? The biggest customer drop-off was stage 2: entering the shop. That sort of information tells your team to work on improving window displays and making better signboards.

A sales funnel will help you pinpoint what's working and what isn't.

How does a sales funnel work?

Sales funnels have varying amounts of stages but boil down to: discovering your business > learning more > making a purchase.

Three, four, and six-stage models are available (and valid), but we'll focus on the six-step one as it's the most detailed of them all.

And we like getting down into details.

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Here's a quick visualization of a 6-stage sales funnel from Awareness to Loyalty. Let's go over what they mean:

You can see the benefit from the business perspective – but a sales funnel is beneficial from the customer's perspective, too. It improves their overall experience when you monitor (and improve!) their steps from discovery to purchase.

And from their point of view, stage six might just be spreading the word about your amazing service.

What's the importance of a sales funnel?

A well-crafted sales funnel is important because it means you aren't tossing out guesses and relying on gut decisions. You have not only a step-by-step selling and marketing process – but a measurable one.

78% of business buyers seek salespeople who act as trusted advisors with knowledge of their needs and industry. But this can only be achieved if you know what needs a prospect has at the moment. And 96% of all visitors to a website are not ready to make a purchase straight away.

A sales funnel can zero in on ideal customers and eliminate the pain of FOMOOS (fear of missing out…on sales ;)).

Here are some top benefits:

1. A focused, defined sales and marketing strategy
2. Increased forecast accuracy
3. Improved customer experience

An improved customer experience will boost your retention rates and profit margin, and lower your customer acquisition costs.

Clear on the concept and its importance, but still scratching your head and wondering, “What is a sales funnel approach I could use in my business?”

Scratch no more, the answer is here.

5 Steps to Create a Sales Funnel For Your Business

1. Understand your product (or service)

And we mean really.

Don't just say I make a SaaS solution for salespeople…

You want to say: “Ringy is an intuitive, affordable sales CRM that can help you sell faster and smarter.”

You can't build a functional sales funnel that attracts your ideal customer unless you understand the ins and outs of your product. Identify your USP (or unique selling proposition). It's the special little thing you do oh-so-much better than the competition and it can really help bring in the right customer (and lots of them).

Let's take another example from Ringy:

“Ringy was designed with ambitious sales teams in mind. Free trial. Free onboarding. Free guidance.”

This quote not only shows knowledge of the product (designed for sales teams, free trial, etc), but knowledge of Ringy's USP: an affordable sales CRM.

You'll attract far more customers into the funnel when you know what you're selling.

2. Understand your target audience

Hopefully, if you really understand your product, this part will come naturally.

Knowing the customers traveling into your sales funnel is crucial. The more you know about your audience, the more effective your sales funnel becomes.

Who are they really? This is all part of building an ideal customer profile (ICP). Remember: you aren't trying to get every person on earth into your funnel. That isn't possible.

Depending on if your company is B2C or B2B, use a CRM's data around demographics or firmographics to form an idea of the main people interested in your service.

Firmographics and demographics are basically the same things. It's just the distinction of whether or not your customer is a business or an individual:

Knowing details like these will help you personalize your experience to your audience. For example, if your target audience is AEs and SDRs, incorporate LinkedIn into your sales funnel strategy via social selling prospecting and LinkedIn ads.

Maybe don't use Instagram influencers. 😏

Your ideal customer and their wants and needs are important things to iron out before you make a funnel for them to travel on.

3. Prepare the funnel itself

A funnel can't exist without prospects, so now that you are actually gathering customers for it, let's start setting it up.

Here's a general guide that can help you prepare it:

Phew – did you take notes? Because it's time to attract some prospects.

4. Grab your potential customer's attention

It's luring time.

Kick-start your funnel by pushing the right clients through it – your ideal customer. But they aren't just going to happen to you (I mean, it could happen…but keep dreaming).

Just like our donut shop from earlier, you need ways to attract business. With a brick-and-mortar shop, this could include colorful signboards, ads put out in newspapers, and commercials.

In the digital world, we use techniques like SEO, paid advertising, and social media.

SEO-friendly content like blogging, backlinks, and popular keywords can help your site pop up when prospects are looking for a solution to their problem. Advertising and social media are also great ways to get your name out there – sometimes the two even go hand-in-hand!

Having a social media presence and using social media ads (also called social selling) really work, too. 78% of salespeople engaged in social selling are outselling their peers who aren't.

5. Find the cracks

They're going to be there, whether you look for them or choose to ignore them merrily.

Cracks and leaks in your funnel mean that even really good leads can slip out because they aren't being properly nurtured.

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Don't worry – the best way to patch up those leaks is by using CRM analytics and robust processes to identify issues with your funnel. This will help you discover where the weak links are and how to correct them.

Are you getting enough email addresses? Are your drip campaigns turning up actual customers and purchases? How many return customers do you get?

This will help you identify problems and address them – but it will take a long time to come up with a solid, leak-proof solution. Sales funnel maintenance is a job that's never completely done.

It's a persistent, constant effort to improve and pinpoint issues. The market is always in motion and a funnel that worked in 2018 isn't guaranteed to work in 2022, so you need to manage your funnel for the rest of eternity.

Yes, it's a lot of work. That's why it's so important to have a CRM with robust analytics and automation like Ringy.

3 Ways to Apply a Sales Funnel to Real Life Situations

1. Align your sales funnel with your sales pipeline

Yes, people confuse these two as the same thing. No, they're very different. Yes, they should still be very close in structure.

Let's quickly separate the two:

1. What is a sales pipeline? Your system of lead generating, prospecting and nurturing.
2. What is a sales funnel? A visual representation of your buyer's decision-making process.

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But they go great together. Ensuring your pipeline and funnel are aligned enables your sales team to determine the optimal number of steps in your sales process, gives insights into your overall strategy, and provides a united experience for customers.

Whether or not they're interacting with a salesperson or traveling through the funnel on their own – it will make a smoother experience for your buyer.

A sales pipeline and sales funnel can be combined easily if you happen to have a killer sales CRM. Ringy is built for efficiency and organization so your sales reps spend less time manually dialing and searching for leads in your system.

It also allows you to track performance, observe growth, and make adjustments at every stage in your pipeline and funnel.

2. Create content for each stage of the funnel

Alright, we told you this takes work. You can't just set up an “Open for business” sign, dust off your hands, and wait for the customers to come bustling in.

You need to live and breathe the funnel.

You're going to need stellar content leading your prospects through this funnel like an excited, helpful tour guide. Something enticing every step of the way.

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So what is a sales funnel approach to content?

Think about the last product that you bought. What was the content surrounding it? Insightful emails and newsletters? Tutorial videos?

Try to offer helpful, insightful content and information all the way from the top to the bottom of your sales funnel. It makes you stand out in a sea of competition when you provide value before the prospect has even spent any money.

3. Build objection management straight into your funnel

Don't just stop at “no”.

Look deeper and understand where your clients are actually saying “not right now”. Managing your sales funnel means you get an up-close and personal look at where your customers are dropping off.

Knowing where key drop-off locations are will help you build a solid customer journey that gently nurtures them from “not right now” to “hmm, interesting” to “I'll check it out…” to “OMG I need that NOW”.

Once you know your weakest sales funnel points, you can use automation tools in your CRM to address objections as they come in. Just like your sales reps handle objections during sales calls.

But don't worry, salespeople – automation isn't quite advanced enough to take your jobs yet.

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Here are some examples of how it can help:

Another benefit to sales funnel automation?

Faster responses to prospective buyers. And marketers who follow up with web leads within 5 minutes are 9 times more likely to convert them.

3 Sales Funnel Examples

1. Ringy

Let's use ourselves as an example of how to use a sales funnel in the SaaS world.

Top of funnel (TOFU) examples:

How-to guidesBlog postsLanding page

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You can see that Ringy's landing page links off to a wealth of other great sales funnel content. Like the middle of the funnel (MOFU) content such as detailed product features, pricing, email support, use cases…

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All the way to the bottom of the funnel content like product demos and speaking to a Ringy representative.

This is a great example of welcoming prospects immediately with a splash screen with informative resources, features, and a nice, clear CTA (call-to-action) button. And it works great for us!

2. Mixergy

Mixergy is a business that sells interviews and online courses featuring entrepreneurs. The sales funnel starts immediately by offering you 9 interviews in your inbox if you would only give them your email address:

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Now that they have your email address, they proceed to send you alluring drip campaigns to try and convert you into a premium member (as there are two levels of membership).

The main page also promotes some of their most recent interviews and classes, as well as gently reminding you that only premium members have access to every interview, course, and class.

Three main points of Mixergy's sales funnel that make it effective:

Immediately enticing you to put in your contact information Giving you great content that you have to pay for Leaving premium content for top members only.

It's a well-designed, functional sales funnel.

3. Hollander Law Firm

Hollander Law Firm is a great example of a simple funnel in a legal environment.

Yes, even lawyers need sales funnels.

Just like Ringy and Mixergy, the first thing you see is a clear CTA for a free case review.

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You also get an immediate pop-up on the right that leads to a live chat (that's also where the red button on the left takes you). Scrolling down will lead you straight to a contact form to get a free consultation – and will “incidentally” give them your contact information, both an email address and phone number.

LawRank is another example in the legal world. They display a great example of a pop-up lead magnet:

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And guess what? If you want the ebook, you have to…

That's right. Put in your contact information.

After clicking through the ebook offer, LawRank also shows examples of educational content, testimonials, contact buttons, and more.

What Is a Sales Funnel FAQs

“What is sales funnel in simple explanation?”

Well…”in simple explanation”? Sales funnel = good.

But seriously, a quick explanation of a sales funnel is a visualization of your customer from the moment they discover your business exists to becoming loyal, paying customers.

Hopefully, one who's a total fan and gives referrals. ;)

“Do sales funnels really work?”

Yes! Why else would we spend over a workday writing and researching this post?

Sales funnels let you observe your sales process and sales cycle, making adjustments as needed and building a relationship with your customer. They allow you to know your audience better, which in turn will boost customer experience and forecasting accuracy, and lower churn rate.

“What is a sales funnel report?”

A sales funnel report gives insight into crucial metrics like conversion rate, flow rate, follow-ups, and drop-offs. It's good to know these in general, but it's also good to monitor how they shift gradually over time.

Ringy's reporting functionality can help you with your sales funnel report to ensure accurate data.

Concluding Thoughts and Next Steps

So – what is a sales funnel and how does it work? We think we nailed that one today.

Visualizing how your customer interacts with your business is essential – after all, they are the ones buying your product and paying your bills. It only makes sense that it's beneficial to monitor how they find your business and their overall experience.

And it isn't hard to create one. Start with your landing page, create some solid lead magnets like ebooks, newsletters, and special offers to grab contact information, and add some valuable content like testimonials and blog posts (hey, it's us!).

Need any help? We got you. A sales CRM like Ringy can help you automate the process and boost sales by up to 48% (and that's according to our internal client numbers!), so get in touch now.

As you build up your sales funnel, remember to keep it aligned with your sales pipeline. If you want some tips on your pipeline, check out How to Build a Sales Pipeline [Step-By-Step Guide] on our blog.